Historically, commercial banks have been thought of as institutions that take money from savers and lend it to borrowers. That is, as financial intermediaries. In recent times, this idea has been turned on its head. Academics and central banks now acknowledge that, because new money is created by commercial banks when they make new loansbanks …
People create money ‘out of thin air’. Not banks! Read More »
Introduction Here’s a question. Who do you think owns the money in your current bank account(s)? If you are still thinking about it, let me make it easier for you by giving you four options: A) the account holder (i.e. you) B) the bank C) both you and the bank D) I don’t know Got …
Introduction In my previous article I discussed what money is in Australia and highlighted that most of the ‘money’ is in the form of bank deposits. It only takes a quick look at the Reserve Bank of Australia’s (RBA) money aggregates to see that the amount of bank deposits in Australia have been growing at …
Introduction Welcome to part two of this series about money in Australia. Part one explored the Bank of England’s (BOEs) definition of money and discussed the first type of money (i.e. currency) in the modern economy. The BOE suggests there are two other types of money. 2. The second type of money is BANK DEPOSITS …
What is money? An Australian perspective: Part two Read More »
Introduction Money is a fascinating topic. It is arguably one the most influential factors in all our lives and yet it is arguably the least understood. So what exactly is money? Have you ever asked yourself what it is, how it works, and where it comes from? These are some of the questions I aim …
What is money? An Australian perspective: Part one Read More »
